TSP Talk – Weekly Wrap Up

The stock market was down every day last week, normally the strongest seasonal week of the year, so we found out that strong seasonality takes a back seat to fiscal cliffs and capital gains selling.

Here are the TSP fund returns for the week of December 24 through December 28 .

The S-fund (small caps) and I-fund (international) still have monthly gains going into Monday’s final day of trading in December. It also looks like we’ll end the year with double digit gains in all of the stocks funds for 2012, as well as modest gains in the bond fund and of course small gains in the G fund. Not a bad year.

The chart of the S&P 500 suffered some technical damage last week but there is always the potential for support at the bottom of a parallel channel. Some kind of deal on the fiscal cliff this weekend could produce a bounce at this potential support line. If that does not hold, the bull market will have to deal with the 200-day EMA again. The last test in November was successful as the break lasted just a few days, but there’s no guarantee that a second break below the 200 EMA will end as well.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The strong late December seasonality did not help the market this year, although who knows how bad things may have gotten if we weren’t in that strong seasonal period last week? The seasonality remains strong into early January, but there is a short stretch after day 3 that has an historical negative return.

Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk

That can probably be explained by investors taking profits after the normally strong holiday period, but of course this year there aren’t many profits to take so it’s possible that we could see a reverse of the norm.

Monday will be the last day that buy and hold investors can sell and pay the lower long-term capital gains rate. If we weren’t also dealing with the fiscal cliff, I would think this could trigger a strong rally in stocks as the capital gains sellers could be using their new cash to buy new positions in January If a fiscal cliff deal is made we could have a perfect storm for a bull market rally. But if there’s no deal, all bets are off.

Administrative Note: It’s that time of year again. Are you on the TSP Talk AutoTracker? When you make interfund transfers (IFTs) in your TSP account, you can also input them in our “AT” and we’ll track your return. It’s free and monthly prizes are awarded for top returns.

We will be rolling over the 2012 AutoTracker accounts into 2013 so if you don’t already have an account on the AutoTracker and wish to be on it in 2013, now would be a good time to get started. You do need to have a Forum account to get on the AutoTracker. For more information on how to get started, click here. (If you have an active AutoTracker account, you do not need to join again.)

Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.

Tom Crowley
Weekly Wrap-Ups Archive
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The legal stuff: This information is for educational purposes only! This is not advice or are commendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

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